02109cam a22002537 4500001000600000003000500006005001700011008004100028100002300069245013800092260006600230490004100296500001900337520093700356530006101293538007201354538003601426690010101462690010101563710004201664830007601706856003701782856003601819w4233NBER20150303183253.0150303s1992 mau||||fs|||| 000 0 eng d1 aMcCallum, Bennett.10aSpecification of Policy Rules and Performance Measures in Multicountry Simulation Studiesh[electronic resource] /cBennett McCallum. aCambridge, Mass.bNational Bureau of Economic Researchc1992.1 aNBER working paper seriesvno. w4233 aDecember 1992.3 aMuch recent analysis of international monetary and fiscal policy issues, such as the choice of an exchange-rate regime or the design of a policy coordination scheme, has been conducted by stochastic simulations with multicountry econometric models. In these studies it has become standard practice to consider alternative policy rules of a particular form that calls for departures of a policy instrument, from some "baseline" reference path, that are proportional to deviations of a specified target variable from its own baseline path. The present paper argues, however, that this standard rule form is seriously defective for evaluating such issues because the implied rules (I) often fail to be operational and (2) have associated performance measures that can be misleading in important cases. An example is presented that concerns the international "assignment problem" of optimally pairing instruments with policy objectives. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aF47 - Forecasting and Simulation: Models and Applications2Journal of Economic Literature class. 7aE17 - Forecasting and Simulation: Models and Applications2Journal of Economic Literature class.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w4233.4 uhttp://www.nber.org/papers/w423341uhttp://dx.doi.org/10.3386/w4233